Nairobi Hospital Audit Report Reveals Ksh2B Loss

The entrance to the Nairobi Hospital.
The entrance to the Nairobi Hospital.
File

A report by an audit firm has revealed how Nairobi Hospital has counted losses worth Ksh2.2 billion within a year. 

The former management of the hospital has been put on the spot for mismanagement of funds as well as failure to follow essential financial rules. 

The current hospital board led by its chairperson Irungu Ndirangu, commissioned the audit to investigate the handling of the hospital's finances. According to the report, there are unexplained revenue irregularities between two internal billing systems, Kranium and Navision, in billing and receipts. 

The Nairobi Hospital CEO Dr Allan Pamba speaking during the ground breaking ceremony. July 20, 2020.
The Nairobi Hospital CEO Dr Allan Pamba speaking during the ground-breaking ceremony. July 20, 2020.
File

“As of December 31, 2019, the total inpatient and outpatient revenue recorded on Kranium for the Financial Year 2019-20 amounted to Ksh12.8 billion. The total revenue recorded on Navision amounted to Ksh10.6 billion resulting in an unexplained variance of Ksh2.2 billion. This is equivalent to two months’ revenue,” reads the report in part.

The report also revealed price variation orders caused a gap in accounting for Ksh2.8 billion. Furthermore, the report showed that orders were not the focal point of discussion during their meetings except for one discussion carried out on the fourth finance and investment committee meeting held in 2019.

There was also a lack of project records, policies, procedures as well as payments to projects without contracts - resulting in another unexplained expenditure of Ksh1 billion. The suppliers were held liable due to the omission of vital documents. 

“During the review of suppliers pre-qualification, we noted that some of the service providers did not submit mandatory documents such as completed trade reference forms, latest audited accounts, tax compliance certificates, completed supplier code of ethics and signed an affidavit on bidder litigation history for the last three years,” says the report.

The document called for disciplinary action to be carried out on the staff that interfered with the procurement processes as the report cited a number of messages between the hospital staff and suppliers. 

In December 2019, the hospital was owed Ksh2.8 billion. It says out of 25 debtors contacted, only one responded and disputed the debt as per the hospital books. 

"In our view, there is a need to investigate credit balances in-depth and reconstruct the debtors account afresh,” reads the report.

The report further revealed a conflict of interest regarding the hiring of key staff within the management. One key staff member had their salary hiked from Ksh600,000 to Ksh900,000. through direct negotiation with the board. The said staff is reported to be a relation of a former board member.

The governance crisis within the hospital had created divisions with the dismissal of new chief executive Allan Pamba. Some members came out to claim they were never consulted by the board chairman. 

The removal of the CEO, who was barely in office for seven months, brought about conflict between some board members and the management. 

The hospital was founded in 1954 as a European hospital, and for years has been the go-to hospital for many esteemed guests including Heads of States from neighboring countries as well top government officials.

Dr. Allan Pamba.
Dr. Allan Pamba.
File